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Gold trades below $3,340 on Monday, retracing part of Friday’s advance.
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Market sentiment turns risk-on after Trump postpones EU tariffs until July 9.
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Lingering concerns over US debt continue to provide underlying support for gold, limiting further losses.
Gold (XAU/USD) edges lower on Monday, trading around $3,330 at the time of writing, as US markets remain closed in observance of Memorial Day. The modest pullback follows a brief risk-on wave after US President Donald Trump announced a delay in implementing 50% tariffs on the European Union (EU) until July 9. The announcement, made via Truth Social, came after a phone call with European Commission President Ursula von der Leyen on Sunday, offering the EU a window to negotiate a trade deal with the Trump administration.
While the easing of immediate trade tensions has buoyed market sentiment, the correction in gold does not necessarily signal the end of its broader rally. A softer tone on tariffs may weaken near-term safe-haven demand, but persistent concerns about the US fiscal outlook continue to underpin gold’s appeal. Investors remain wary of Trump’s tax bill, which recently passed the House and now heads to the Senate, with fears that it could significantly expand the US deficit and national debt, reinforcing the case for holding gold as a hedge.
Daily digest market movers: Temporary tariff delay lacks structural change
- President Trump’s decision to delay EU tariffs until July 9 offers only a temporary reprieve, and analysts caution against interpreting the move as a shift in his broader protectionist stance. On Friday, Trump had threatened steep 50% tariffs on the EU and warned Apple Inc. it could face a 25% tariff on iPhones not manufactured in the US, according to Bloomberg. eToro analyst Josh Gilbert emphasized that these delays don't equate to fundamental policy changes, noting, “Pauses are all well and good for now, but during this time, we need to see more agreements in place to confirm Trump’s more negotiable approach.”
- Elsewhere, Vietnam’s Prime Minister Pham Minh Chinh has called on the central bank, finance ministry, and related agencies to explore launching a regulated gold exchange aimed at promoting transparency and curbing smuggling and manipulation, Bloomberg reports.
- Meanwhile, the US Dollar continues to slide, extending losses from Friday as investor enthusiasm for the currency fades amid escalating fiscal worries. Speculative positioning against the dollar narrowed slightly to $12.4 billion for the week ending May 20, down from $16.5 billion the previous week, based on CFTC data cited by Reuters.
Gold Price Technical Analysis: Temporary dip within a bullish trend
Gold prices face mild pressure as investors momentarily shift into risk assets following the Trump-von der Leyen agreement to extend trade talks. However, the delay spans only one month, and achieving a comprehensive trade agreement between the two sides in such a short timeframe remains unlikely. As such, this relief may prove temporary, with the broader backdrop of fiscal and geopolitical uncertainty continuing to support gold prices.
To the upside, the first resistance level to watch is the R1 at $3,386. A break above this could pave the way toward R2 at $3,415 and potentially a test of the $3,440 round number, with a longer-term target at the all-time high near $3,500.
On the downside, solid support lies at the daily S1 at $3,307, helping defend the $3,300 psychological level. Additional support is seen at S2 around $3,258, with a key technical pivot at $3,245, roughly aligned with deeper support at $3,240. Despite the current pullback, the broader technical setup continues to favor gold bulls.
